Banking system reluctant to lend
THE EDITOR, Sir:
As has been pointed out, the laws of Jamaica have recently been structured so as to allow lenders, particularly banks, to have greater freedom to lend, and also to recover business losses.
While a bank may say, "I am not risking my clients' money," his client is saying, "Well, get a better rate for my funds on deposit. There is no reason to have the funds idle; I have no use for them now."
In the past, this problem was solved by the Bank of Jamaica or the Government of Jamaica, in the form of special funds available through a bank or line of credit. Through JECIC, liabilities were insured, and while that applied to export sales, I see no reason why a similar kind of insurance package may not be taken out. I recall Premier Investment Corp, Jamaica Development Bank, among others, had some kind of package.
There seems to be some concern about intellectual property, as to how this may be valued for providing collateral. This item may be a design, a book, a painting, music expressed on some media, copyright that may be restricted.
The fact is that all the so-called intellectual properties worldwide have some value, which may be placed on them by internationally acclaimed insurers or valuators, and there are several capable companies in this business (Sotheby's, Christie's). If the property cannot be resold, or valued in Jamaica, there is always the option to get an overseas buyer, or valuator, adjusting for costs.
For years, credit unions have been seeing these jobs within their parameters, and there are a slew of new lenders ready to try.
Why then are our commercial banks not prepared to accommodate this simple request in available capital for new projects? I am informed that the money is there, but proper methods need to be implemented to ensure that capital collateral may be used to pay out against losses.
I view the banking system as reluctant to try out varied options in obtaining collateral. Some years ago, I recall that a bank would take out fixed or floating debentures and various liens on assets of a company as part of the collateral needed for a project. I recall as a jeweller at the time, I would hand over my stock of precious metals to my banker; he would store it, then distribute it back to my company as part of my working capital, or until earnings were such to pay all or some of the liabilities so created.
All they do now is LAMP us with SLOW responses; regrettably taking more time to tell us NO. I would suggest our Government review the banking law, giving banks the adjustments needed for expeditious handling. There are other options depending on the size of plant operations.